The main benefit of a VE program is improvement of the benefit-to-cost ratio throughout state transportation programs. Other perceived benefits are as follows:

• Design, construction, and maintenance standards are constantly being reviewed through VE team activities.

• The structured, functional approach using a job plan (see Arts. 10.3 and 10.4) provides trained employees with a new method of approaching problems.

• VE team members develop an appreciation for the concerns and issues of other functional areas or disciplines, and communications are often improved.

• Team work skills and team dynamics are enhanced in the design process.

• Designers improve or develop their skills in preparing and delivering to management logical, organized presentations supporting their views.

• After gaining VE experience, many designers find it comparatively easy to apply the principles in the regular design process.

• Implementing a VECP program has a potential for improving state/contractor relations through more cooperative processing of change proposals.

• Proven VE designs or techniques and VECP-accepted changes often have applica­tions for numerous future projects or contracts, thereby providing continuing savings and other benefits.

10.2.2 Training

AASHTO recommends that orientation and training be provided at nearly every level within the organization, including team members, team leaders, and management. Executive management must understand and support the fundamentals and principles of VE for the program to be successful. VE administrators, team leaders, and team members need basic and subsequent training to ensure success of the VE process and the implemen­tation of recommendations. An overview of the procedures and the benefits of VE should be provided to staff not directly involved to encourage understanding and support.

Training in VE is available from various sources, including the National Highway Institute and consultants. A combination of VE theory and hands-on experience is desirable. SAVE International (formerly Society of American Value Engineers) offers several forms of VE certification. (See www. value-eng. com.) To become certified, one must meet all of the employment, VE performance standards, formal training, pro­fessional growth, and professional contribution requirements established by SAVE. The following certifications are available:

• A value methodology practitioner. Individuals who are familiar with VE but whose primary occupation is not VE.

• An associate value specialist. Individuals familiar with VE, but who have not acquired enough points to become a certified value specialist.

• A certified value specialist (CVS). Individuals whose principal occupation is VE.

To become a CVS, one must attend a 40-h SAVE-certified Mod I VE workshop and a 24-h SAVE-certified Mod II VE workshop, have 50 percent or more of the job description relate to VE, perform a number of VE studies as a team member and as a team leader, write a paper on VE, and take a test. Normal time to become certified is 4 to 5 years.

To assist state DOTs in the application of VE, the AASHTO Task Force on Value Engineering, originally organized in 1985, has developed the publication, Guidelines for Value Engineering, already cited. Portions of the publication[22] are summarized in Arts. 10.2.1 through 10.2.6. The AASHTO value engineering technical committee maintains a useful website, www. wsdot. wa. gov/partners/AASHTOVE. Also, a VE engineering conference is sponsored every 2 years.

AASHTO has taken the position that every member state should establish an ongoing VE program to improve design excellence and achieve cost and quality control. VE is seen as a means for addressing the problem of rising costs and diminishing resources through applications in many areas such as project development, construction, traffic operations, and maintenance.

10.2.1 Elements of a Successful VE Program

AASHTO suggests the following as important elements of a successful VE program:

• A firm commitment of resources and support by executive management is the most important element for ensuring the success of a VE program.

• All levels of management must understand and support VE.

• A state VE program requires the development of a policy directive describing where, when, how, and to what specific areas of work the VE effort should be directed.

• It is essential to provide some degree of VE training and program familiarization at every level within the state organization.

• For optimal results in the project development phase, VE should be performed as follows:

Early in the planning-design process to maximize potential product improvement and cost savings.

On high-cost and/or complex projects.

By a multidisciplinary team of professionals trained in VE techniques.

• A value engineering change proposal program to encourage contractors to develop construction VE proposals allows the state to benefit from a contractor’s design and construction ingenuity, experience, and ability to work through or around bureaucrat­ic restrictions. Some important elements of a successful, ongoing VECP program are the following:

Processing of proposals must be kept simple and done quickly.

Cost savings are shared with the contractor.

Change proposals become the property of the state, and the concept may be used on future projects.

Change proposals should not compromise any essential design criteria or preliminary engineering commitments.

Change proposals cannot be the basis for a contract claim. The state agency has the option to reject, with good justification, contractors’ proposals.

• It is essential that all VE team recommendations and contractor proposals be fairly reviewed and expeditiously evaluated for implementation.

• VE techniques can also be used to improve productivity in other areas of a state’s transportation program, including traffic operations, maintenance processes, proce­dures and operations, standard plans and specifications, and design criteria and guidelines.

• VE programs within the state organization should be closely monitored, evaluated, and modified to ensure the program’s effectiveness.

It is also emphasized that understanding and support of VE by top management are the most important factors in a successful VE program. Such support is needed initially to ensure adequate funding for training of staff and establishment of the program. Once the VE program is established, the continuing active involvement of top management is needed to create and maintain positive attitudes.

The FHWA has developed the following federal-aid policy guide that provides much useful information for the application of VE:

1. PURPOSE. To provide policy guidance on the application of value engineering in

the federal-aid highway program.

2. AUTHORITY.

a. Section 106(e) of Title 23, United States Code provides: “For such projects as the Secretary determines advisable, plans, specifications, and estimates for proposed projects on any Federal-aid system shall be accompanied by a value engineering or other cost reduction analysis.”

b. Section 106(g) of Title 23, United States Code provides: “The Secretary shall establish a program to require States to carry out a value engineering analysis for all projects on the National Highway System [NHS] with an estimated total cost of $25,000,000 or more.” The Federal Highway Administration published its regulation establishing this program on February 14, 1997.

c. Paragraph 6b(2) of DOT Order 1395.1A, Use of Value Engineering in the Department of Transportation, dated May 8, 1992, provides: “Each DOT Operating Administration should strongly encourage the use of VE in its grant awards or Federally assisted programs for major transportation projects throughout the planning, design and/or construction phases. This may include the use of VE proposals as a result of VE studies/analyses as well as VE incentive clauses in construction contracts.”

d. Paragraph 9 of the Office of Management and Budget’s (OMB) Value Engineering Circular A-131, dated May 21, 1993, provides: “Each agency shall report Fiscal Year results of using VE annually to OMB, except those agencies whose total budget is under $10 million or whose total procurement obligations do not exceed $10 million in a given fiscal year.” The Circular also describes what VE data must be submitted and the format for submitting the data to OMB.

3. DEFINITIONS.

a. Life cycle cost: The total cost of an item’s ownership over its life cycle. This includes initial acquisition costs (right-of-way, planning, design, construction), operation, maintenance, modification, replacement, demolition, financing, taxes, disposal, and salvage value as applicable.

b. Project: A portion of a highway that a state proposes to construct, reconstruct, or improve as described in the preliminary design report or applicable environ­mental document. A project may consist of several contracts or phases over several years.

c. Product or service: Any element of a highway project from concept through maintenance and operation. In all instances, the required function should be achieved at the lowest life cycle cost consistent with requirements for perfor­mance, maintainability, safety, and aesthetics.

d. Value engineering: The systematic application of recognized techniques by a multidisciplinary team to identify the function of a project or service, establish a worth for that function, generate alternatives through the use of creative thinking, and provide the needed functions to accomplish the original purpose of the project, reliably, and at the lowest life cycle cost without sacrificing safety, necessary quality, and environmental attributes of the project.

e. Value Engineering Change Proposal (VECP) clause: A construction contract provision that encourages the contractor to propose changes in the contract requirements which will accomplish the project’s functional requirements at less cost or improve value or service at no increase or a minor increase in cost. The net savings of each proposal is usually shared with the contractor at a stated reasonable rate.

4. POLICY. The FHWA will ensure that a VE study is performed on all federal-aid – funded NHS projects with an estimated cost (includes design, right-of-way, and construction costs) of $25 million or more, and on other federal-aid projects where its employment has high potential for cost savings. In addition, FHWA will strongly encourage state departments of transportation to use VE throughout high­way project development, design, and construction.

5. CHARACTERISTICS. To be considered VE, the analysis process should incorporate each of the following characteristics:

a. A multidisciplinary team approach

b. The systematic application of a recognized technique (VE job plan)

c. The identification and evaluation of function, cost, and worth

d. The use of creativity to speculate on alternatives that can provide the required functions (search for solutions from new and unusual sources)

e. The evaluation of the best and lowest life cycle cost alternatives

f. The development of acceptable alternatives into fully supported recommendations

g. The presentation/formal reporting of all VE recommendations to management for review, approval, and implementation.

6. APPLICATION.

a. A VE analysis shall be applied to all federal-aid-funded NHS projects with estimated costs of $25 million or more; however, VE should not be limited to only projects of this scope. It can also be highly effective when used on other projects when there is potential for a significant ratio of savings to the cost of the VE study or substantial improvements in project or program effectiveness.

b. For maximum benefit, VE should be employed as early as possible in the pro­ject development/design process so valid VE recommendations can be imple­mented without delaying the progress of the project or causing significant rework of completed designs. States should schedule VE routinely into the project development/design process. While all projects will not necessarily benefit from the application of VE, the review process should be set up to con­sider all projects and a VE analysis should be applied to those projects offering the greatest potential for improvement and/or savings.

c. Recommendations from VE studies and VECPs should receive prompt reviews by state officials to determine their acceptability. States should also develop procedures for implementing accepted recommendations.

7. BACKGROUND INFORMATION. The FHWA’s text “Value Engineering for Highways” provides further details on the VE technique and its applicability to high­way projects and functions. It has been widely distributed as a part of FHWA’s train­ing effort and a copy should be available in each state DOT and FHWA office. Additional copies may be obtained from the FHWA VE coordinator. The American Association of State Highway and Transportation Officials (AASHTO) Guidelines for Value Engineering (AASHTO, Washington, D. C., 2001) also pro­vides an excellent description of VE.

8. FHWA RESPONSIBILITIES.

a. Division office

(1) Designate a VE coordinator and encourage state to host VE training provided by the FHWA, a qualified VE consultant, and/or develop its own VE training.

(2) Encourage state to use VE by actively participating in VE studies and advising it that VE study costs are eligible (as preliminary engineering costs) for federal-aid participation.

(3) Ensure all applicable NHS projects receive a VE analysis and encourage additional studies of other projects.

(4) Ensure the state has an active VE program and encourage it to include a VECP clause in its construction contracts.

(5) Summarize the state’s VE activity on all federal-aid projects annually and provide the information to the FHWA VE coordinator.

b. FHWA VE coordinator

(1) Promote VE and serve as the technical expert on VE matters for FHWA, state, and local highway agencies.

(2) Provide VE briefings to FHWA, state, and local executives and upper management.

(3) Provide VE training and technical expertise to FHWA, state, and local highway agencies. Assist states to develop VE programs.

(4) Coordinate VE with other FHWA activities aimed at cost reduction or product improvement.

(5) Compile VE activity data received from the division offices and prepare annual report for DOT.

(6) Represent FHWA in VE forums with the U. S. DOT and other federal and state governmental agencies, including membership in SAVE International (formerly the Society of American Value Engineers). Serve as FHWA’s representative to the AASHTO VE Task Force.

9. STATE DOT RESPONSIBILITIES.

a. Each state shall establish a continuing VE program that ensures all applicable NHS projects will receive a VE analysis and provides for the review, approval, implementation, and documentation of the VE study recommendations. Individuals knowledgeable in VE shall be assigned the responsibility to coor­dinate and monitor the program. States should also develop a VE training pro­gram, a tracking and/or record keeping system, and a process to disseminate

and publicize their VE results. This work may include the use of qualified VE specialists on a consulting basis.

b. States should include a VECP clause in their construction contracts to encour­age contractors to propose changes in contract requirements which will do the following:

(1) Reduce project cost(s) or improve value or service at no increase or a minor increase in cost.

(2) Provide states with innovative contractor ideas or techniques to be considered when preparing plans, specifications, and estimates on future projects.

The net savings of each proposal should be shared with the contractor at a stated reasonable rate. Reimbursement for such share is eligible for pro rata reimburse­ment with federal-aid funds. States should retain the right to accept or reject all proposals and acquire all rights to use accepted VE proposals in current and future projects without restriction. An example VECP provision is contained in the AASHTO Guidelines for Value Engineering.

10. USE OF CONSULTANTS. States may employ qualified VE consultants to conduct VE studies on federal-aid projects or elements of federal-aid projects. Consulting firms should not apply VE to their own designs (the law prohibits persons involved in the project from being on the VE team). It is strongly recommended that consultants be qualified VE practitioners, be experienced in performing and leading VE studies (have participated in several VE studies as a team member and as a team leader), and have sufficient VE training, education, and experience to be recognized by SAVE International as meeting the requirements for certification.

11. REPORTING.

a. All VE studies and VECP conducted on federal-aid projects shall be used to pre­pare an annual VE summary report. At the end of the fiscal year, each division office and/or state DOT will prepare the annual VE summary report and submit it to the FHWA VE coordinator. Reports are due by November 10 of each year.

b. The FHWA VE coordinator shall prepare an annual report including an assess­ment of the effectiveness of efforts to encourage VE on federal-aid projects to the U. S. DOT by December 10 of each year.